Keryx Biopharmaceuticals (KERX) Reports 4Q and Full Year 2016 Results


Keryx Biopharmaceuticals (NASDAQ:KERX) announced its financial results for the fourth quarter and year ended December 31, 2016. The company also reviewed its commercial progress with Auryxia and upcoming milestones.

“We are off to a very good start in 2017 with Auryxia in the dialysis patient population,” said Greg Madison, president and chief executive officer of Keryx. “During a period when the phosphate binder market declined, Auryxia prescriptions grew to approximately 4,650 in January, an increase of 3.3 percent from the approximate 4,500 prescriptions reported in December 2016.”

Mr. Madison continued, “we look forward to important milestones over the year that would mark continued progress toward our goal of maximizing Auryxia’s potential. These include continued growth in the U.S. dialysis market, acceptance and assignment of a target review date for the supplemental new drug application submitted in January to the U.S. FDA to expand the indication of Auryxia for the treatment of iron deficiency anemia (IDA) in adults with non-dialysis dependent chronic kidney disease, and the subsequent approval and launch in late 2017. If approved for this indication, Auryxia could be the first FDA-approved oral medicine to treat IDA in this patient population.”

Fourth Quarter, Full Year 2016 Financial Results and Recent Business Highlights

On January 8, 2017, Keryx provided a review of its preliminary fourth quarter and full year 2016 commercial progress and financial results. The company today provided final results for the same periods in 2016, and the following updates:

Auryxia Recent Commercial Progress

  • Fourth quarter 2016 net U.S. product sales for Auryxia were $8.2 million compared to $4.8 million for the fourth quarter of 2015, an approximately 70 percent increase despite the three-month supply interruption from August to November 2016. Full year 2016 net U.S. product sales for Auryxia were $27.2 million compared to $10.1 million for the full year 2015, an approximately 170 percent year-over-year increase.
  • Approximately 8,700 prescriptions for Auryxia were reported in the fourth quarter of 2016, which included approximately 4,500 prescriptions reported for the month of December, the first full month of sales post resupply of Auryxia. This compares to approximately 5,000 prescriptions for the month of July 2016, the last full month of sales prior to the supply interruption.
  • Keryx reported today that in January 2017 Auryxia prescriptions increased to approximately 4,650, or 3.3 percent from December 2016, while the overall market for phosphate binder prescriptions declined by 2.6 percent.

Potential Label Expansion Opportunity

  • Keryx is executing on its strategy to leverage its commercial capabilities. In January 2017, the company submitted a supplemental new drug application seeking label expansion for Auryxia to include the treatment of iron deficiency anemia (IDA) in adults with non-dialysis dependent chronic kidney disease (NDD-CKD). The company estimates that of the 1.7 million Americans with CKD under the care of a nephrologist, approximately 650,000 people are treated for IDA and another 250,000 – 400,000 people could have IDA but are not treated today.
  • Detailed results from the company’s pivotal Phase 3 trial that evaluated ferric citrate for the treatment of IDA in adults with stage 3 – 5 NDD-CKD were published online in the Journal of the American Society of Nephrology in January. Publication of the data should advance understanding of the potential importance of Auryxia to treat this serious disease.

Fourth Quarter and Year Ended December 31, 2016 Financial Results

Total revenues for the quarter ended December 31, 2016 were approximately $9.5 million, compared with $5.8 million during the same period in 2015. Total revenue for the fourth quarter of 2016 consist of approximately $8.2 million in ex-factory Auryxia net U.S. product sales, compared to $4.8 million in the fourth quarter of 2015, which were recorded based on actual prescriptions written during the period. Total revenue for the fourth quarter of 2016 also includes $1.3 million in license revenues as compared to $1.0 million during the same period in 2015.

For the year ended 2016, total revenues were approximately $32.0 million as compared to $13.7 million in 2015. Total revenues for 2016 include $27.2 million of Auryxia net U.S. product sales and $4.8 million in license revenues as compared to $10.1 million and $3.5 million, respectively, in 2015.

Cost of goods sold for the quarter ended December 31, 2016 were approximately $13.4 million, compared with $1.1 million during the same period in 2015. Cost of goods sold for the fourth quarter of 2016 include approximately $11.8 million in write-offs of work-in-process inventory that was determined to no longer be suitable for commercial manufacture.

For the year ended 2016, total cost of goods sold were approximately $37.8 million, as compared to $4.5 million in 2015. Total 2016 cost of goods include $25.6 million in write-offs of work-in-process inventory that was determined to no longer be suitable for commercial manufacture and approximately $2.6 million related to manufacturing charges incurred as a result of not fully utilizing planned production at the company’s third-party drug product manufacturers. Total 2015 cost of goods sold included $2.6 million related to manufacturing charges incurred as a result of not fully utilizing planned production at the company’s third-party drug product manufacturers.

Research and development expenses for the quarter ended December 31, 2016 were $6.2 million, as compared to $8.0 million during the same period in 2015. The decrease was primarily related to a reduction in development work at our contract manufacturers following approval of a second drug product contract manufacturer in the fourth quarter of 2016, as well as a decrease in clinical costs following the completion of our Phase 3 clinical trial in early 2016.

Selling, general and administrative expenses for the quarter ended December 31, 2016 were $23.0 million, as compared to $21.6 million during the same period in 2015. The increase was related to the continued commercialization of Auryxia, including an expanded sales force in the fourth quarter of 2016 as compared to the same period in 2015.

Net loss for the quarter ended December 31, 2016 was $33.8 million, or $0.32 per share, compared to a net loss of $37.8 million, or $0.36 per share, for the comparable period in 2015.  For the full year 2016, net loss was $161.1 million, or $1.52 per share, as compared to $123.1 million, or $1.19 per share in 2015.

Cash and cash equivalents as of December 31, 2016 totaled approximately $111.8 million.

Shares of Keryx are currently trading at $5.42, up $0.39 or 7.75%. KERX has a 1-year high of $7.80 and a 1-year low of $3.99. The stock’s 50-day moving average is $5.35 and its 200-day moving average is $5.25.

On the ratings front, KERX has been the subject of a number of recent research reports. In a report issued on January 11, Citigroup analyst Yigal Nochomovitz upgraded the stock to Hold, with a price target of $6.50, which represents a potential upside of 29% from where the stock is currently trading. Separately, on January 9, J.P. Morgan’s Whitney Ijem reiterated a Hold rating on the stock and has a price target of $5.00.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Yigal Nochomovitz and Whitney Ijem have a yearly average loss of -0.7% and -9.7% respectively. Nochomovitz has a success rate of 47% and is ranked #3334 out of 4503 analysts, while Ijem has a success rate of 40% and is ranked #3900.

Keryx Biopharmaceuticals, Inc. engages in the development and commercialization of medicines for the treatment of renal disease. Its products include phosphate-binding medicines, intravenous iron, and other medications.

 

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